x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
26-0287117
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
x
|
|
|
Emerging growth company
|
¨
|
|
||
|
||
|
||
|
||
Item 2
.
|
||
|
|
|
•
|
the expected benefits of our completed restructuring under chapter 11 of the United States Bankruptcy Code (“the Bankruptcy Code”) to improve our long-term capital structure;
|
•
|
future financial performance and growth targets or expectations;
|
•
|
market and industry trends and developments, including, but not limited to, statements regarding fluctuations in oil and natural gas prices and third-party projections for the markets in which we operate; and
|
•
|
the potential benefits of our completed and any future merger, acquisition, disposition, restructuring, and financing transactions.
|
•
|
the effects of our completed restructuring on the Company and the interests of various constituents;
|
•
|
risks and uncertainties associated with the restructuring process, including the outcome of a pending appeal of the order confirming the plan of reorganization and our ability to execute the requirements of the plan of reorganization subsequent to the effective date;
|
•
|
the bankruptcy and, as applicable, appellate court’s rulings in our chapter 11 cases, including appeals thereof, and the outcome of our chapter 11 cases in general;
|
•
|
the effects of the increased advisory costs to execute a reorganization;
|
•
|
our inability to maintain relationships with customers, suppliers, employees and other third parties as a result of our chapter 11 filing;
|
•
|
the loss of one or more of our larger customers;
|
•
|
our ability to attract and retain key executives and qualified employees in key areas of our business;
|
•
|
our ability to attract and retain a sufficient number of qualified truck drivers in light of industry-wide driver shortages and high-turnover;
|
•
|
risks associated with our indebtedness, including changes to interest rates, decreases in our borrowing availability, our ability to manage our liquidity needs and to comply with covenants under our credit facilities;
|
•
|
the availability of less favorable credit and payment terms due to the recent downturn in our industry, our financial condition, and the chapter 11 proceeding, including more stringent or costly payment terms from our vendors, which may constrain our liquidity and reduce availability under our revolving credit facility;
|
•
|
risks associated with our ability to collect outstanding receivables as a result of liquidity constraints on our customers resulting from low oil and/or natural gas prices;
|
•
|
difficulties in identifying and completing acquisitions and divestitures, and differences in the type and availability of consideration or financing for such acquisitions and divestitures;
|
•
|
difficulties in successfully executing our growth initiatives, including difficulties in permitting, financing and constructing pipelines and waste treatment assets and in structuring economically viable agreements with potential customers, joint venture partners, financing sources and other parties;
|
•
|
higher than forecasted capital expenditures to maintain and repair our fleet of trucks, tanks, equipment and disposal wells;
|
•
|
control of costs and expenses;
|
•
|
risks associated with the limited trading volume of our common stock on the NYSE American Stock Exchange, including potential fluctuations in the trading prices of our common stock;
|
•
|
risks associated with the reliance on third-party analyst and expert market projections and data for the markets in which we operate;
|
•
|
risks associated with changes in industry practices and operational technologies and the impact on our business;
|
•
|
present and possible future claims, litigation or enforcement actions or investigations;
|
•
|
financial results that may be volatile and may not reflect historical trends due to, among other things, changes in commodity prices or general market conditions, acquisition and disposition activities, fluctuations in consumer trends, pricing pressures, changes in raw material or labor prices or rates related to our business and changing regulations or political developments in the markets in which we operate;
|
•
|
changes in customer drilling, completion and production activities, operating methods and capital expenditure plans, including impacts due to low oil and/or natural gas prices or the economic or regulatory environment;
|
•
|
fluctuations in prices, transportation costs and demand for commodities such as oil and natural gas;
|
•
|
risks associated with the operation, construction, development and closure of saltwater disposal wells, solids and liquids treatment and transportation assets, landfills and pipelines, including access to additional locations and rights-of-way, environmental remediation obligations, unscheduled delays or inefficiencies and reductions in volume due to micro- and macro-economic factors or the availability of less expensive alternatives;
|
•
|
the effects of competition in the markets in which we operate, including the adverse impact of competitive product announcements or new entrants into our markets and transfers of resources by competitors into our markets;
|
•
|
changes in economic conditions in the markets in which we operate or in the world generally, including as a result of political uncertainty;
|
•
|
reduced demand for our services due to regulatory or other influences related to extraction methods such as hydraulic fracturing, shifts in production among shale areas in which we operate or into shale areas in which we do not currently have operations;
|
•
|
the unknown future impact of changes in laws and regulation on waste management and disposal activities, including those impacting the delivery, storage, collection, transportation, treatment and disposal of waste products, as well as the use or reuse of recycled or treated products or byproducts;
|
•
|
risks involving developments in environmental or other governmental laws and regulations in the markets in which we operate and our ability to effectively respond to those developments including laws and regulations relating to oil and natural gas extraction businesses, particularly relating to water usage, and the disposal, transportation and treatment of liquid and solid wastes; and
|
•
|
natural disasters, such as hurricanes, earthquakes and floods, or acts of terrorism, or extreme weather conditions, that may impact our business locations, assets, including wells or pipelines, distribution channels, or which otherwise disrupt our or our customers’ operations or the markets we serve;
|
•
|
other risks identified in this Quarterly Report or referenced from time to time in our filings with the United States Securities and Exchange Commission.
|
|
Successor
|
||||||
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,088
|
|
|
$
|
5,488
|
|
Restricted cash
|
2,084
|
|
|
1,296
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $2.3 million and $1.9 million at March 31, 2018 and December 31, 2017, respectively
|
36,186
|
|
|
30,965
|
|
||
Inventories
|
3,750
|
|
|
4,089
|
|
||
Prepaid expenses and other receivables
|
5,822
|
|
|
8,594
|
|
||
Other current assets
|
107
|
|
|
226
|
|
||
Assets held for sale
|
9,530
|
|
|
2,765
|
|
||
Total current assets
|
61,567
|
|
|
53,423
|
|
||
Property, plant and equipment, net of accumulated depreciation of $49.2 million and $35.8 million at March 31, 2018 and December 31, 2017, respectively
|
202,892
|
|
|
229,874
|
|
||
Equity investments
|
42
|
|
|
48
|
|
||
Intangibles, net
|
503
|
|
|
547
|
|
||
Goodwill
|
27,139
|
|
|
27,139
|
|
||
Deferred income taxes
|
84
|
|
|
84
|
|
||
Other assets
|
196
|
|
|
207
|
|
||
Total assets
|
$
|
292,423
|
|
|
$
|
311,322
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Accounts payable
|
$
|
9,602
|
|
|
$
|
7,946
|
|
Accrued liabilities
|
15,458
|
|
|
13,939
|
|
||
Current contingent consideration
|
500
|
|
|
500
|
|
||
Current portion of long-term debt
|
5,108
|
|
|
5,525
|
|
||
Derivative warrant liability
|
669
|
|
|
477
|
|
||
Total current liabilities
|
31,337
|
|
|
28,387
|
|
||
Long-term debt
|
32,784
|
|
|
33,524
|
|
||
Other long-term liabilities
|
6,518
|
|
|
6,438
|
|
||
Total liabilities
|
70,639
|
|
|
68,349
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common stock
|
117
|
|
|
117
|
|
||
Additional paid-in capital
|
301,729
|
|
|
290,751
|
|
||
Accumulated deficit
|
(80,062
|
)
|
|
(47,895
|
)
|
||
Total shareholders’ equity
|
221,784
|
|
|
242,973
|
|
||
Total liabilities and shareholders’ equity
|
$
|
292,423
|
|
|
$
|
311,322
|
|
|
Successor
|
|
Predecessor
|
||||
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenue:
|
|
|
|
||||
Service revenue
|
$
|
45,527
|
|
|
$
|
35,418
|
|
Rental revenue
|
4,142
|
|
|
3,805
|
|
||
Total revenue
|
49,669
|
|
|
39,223
|
|
||
Costs and expenses:
|
|
|
|
||||
Direct operating expenses
|
41,627
|
|
|
34,289
|
|
||
General and administrative expenses
|
19,320
|
|
|
12,359
|
|
||
Depreciation and amortization
|
14,744
|
|
|
12,871
|
|
||
Impairment of long-lived assets
|
4,131
|
|
|
—
|
|
||
Other, net
|
599
|
|
|
—
|
|
||
Total costs and expenses
|
80,421
|
|
|
59,519
|
|
||
Operating loss
|
(30,752
|
)
|
|
(20,296
|
)
|
||
Interest expense, net
|
(1,250
|
)
|
|
(14,208
|
)
|
||
Other expense, net
|
(73
|
)
|
|
(1,458
|
)
|
||
Reorganization items, net
|
(92
|
)
|
|
—
|
|
||
Loss before income taxes
|
(32,167
|
)
|
|
(35,962
|
)
|
||
Income tax expense
|
—
|
|
|
—
|
|
||
Net loss
|
$
|
(32,167
|
)
|
|
$
|
(35,962
|
)
|
|
|
|
|
||||
Net loss per common share:
|
|
|
|
||||
Net loss per basic common share
|
$
|
(2.75
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
||||
Net loss per diluted common share
|
$
|
(2.75
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
||||
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
11,696
|
|
|
150,934
|
|
||
Diluted
|
11,696
|
|
|
150,934
|
|
|
|
Successor
|
|
Predecessor
|
||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(32,167
|
)
|
|
$
|
(35,962
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization of intangible assets
|
14,744
|
|
|
12,871
|
|
||
Amortization of debt issuance costs, net
|
—
|
|
|
1,756
|
|
||
Accrued interest added to debt principal
|
119
|
|
|
6,340
|
|
||
Stock-based compensation
|
10,978
|
|
|
309
|
|
||
Impairment of long-lived assets
|
4,131
|
|
|
—
|
|
||
Gain on sale of UGSI
|
(75
|
)
|
|
—
|
|
||
(Gain) loss on disposal of property, plant and equipment
|
(8
|
)
|
|
49
|
|
||
Bad debt expense
|
313
|
|
|
778
|
|
||
Change in fair value of derivative warrant liability
|
192
|
|
|
1,618
|
|
||
Other, net
|
149
|
|
|
56
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(5,534
|
)
|
|
(462
|
)
|
||
Prepaid expenses and other receivables
|
(2,573
|
)
|
|
(433
|
)
|
||
Accounts payable and accrued liabilities
|
2,110
|
|
|
5,872
|
|
||
Other assets and liabilities, net
|
368
|
|
|
(78
|
)
|
||
Net cash used in operating activities
|
(7,253
|
)
|
|
(7,286
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from the sale of property, plant and equipment
|
11,881
|
|
|
371
|
|
||
Purchases of property, plant and equipment
|
(3,380
|
)
|
|
(1,029
|
)
|
||
Proceeds from the sale of UGSI
|
75
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
8,576
|
|
|
(658
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from Predecessor revolving credit facility
|
—
|
|
|
48,536
|
|
||
Payments on Predecessor revolving credit facility
|
—
|
|
|
(40,006
|
)
|
||
Payments on Successor First and Second Lien Term Loans
|
(799
|
)
|
|
—
|
|
||
Proceeds from Successor revolving facility
|
55,321
|
|
|
—
|
|
||
Payments on Successor revolving facility
|
(56,001
|
)
|
|
—
|
|
||
Payments on vehicle financing and other financing activities
|
(456
|
)
|
|
(1,468
|
)
|
||
Net cash (used in) provided by financing activities
|
(1,935
|
)
|
|
7,062
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(612
|
)
|
|
(882
|
)
|
||
Cash, cash equivalents and restricted cash - beginning of period
|
6,784
|
|
|
2,414
|
|
||
Cash, cash equivalents and restricted cash- end of period
|
$
|
6,172
|
|
|
$
|
1,532
|
|
|
|
|
|
||||
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
951
|
|
|
$
|
733
|
|
Cash paid for taxes, net
|
52
|
|
|
59
|
|
|
Successor
|
||||||||||||||||||
|
For the Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Rocky Mountain
|
|
Northeast
|
|
Southern
|
|
Corp/Other
|
|
Total
|
||||||||||
Water Transfer Services
|
$
|
21,260
|
|
|
$
|
8,019
|
|
|
$
|
8,111
|
|
|
$
|
—
|
|
|
$
|
37,390
|
|
Disposal Services
|
3,612
|
|
|
777
|
|
|
1,236
|
|
|
—
|
|
|
5,625
|
|
|||||
Other Revenue
|
2,124
|
|
|
254
|
|
|
134
|
|
|
—
|
|
|
2,512
|
|
|||||
Total Service Revenue
|
26,996
|
|
|
9,050
|
|
|
9,481
|
|
|
—
|
|
|
45,527
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental Revenue
|
3,774
|
|
|
63
|
|
|
305
|
|
|
—
|
|
|
4,142
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Revenue
|
$
|
30,770
|
|
|
$
|
9,113
|
|
|
$
|
9,786
|
|
|
$
|
—
|
|
|
$
|
49,669
|
|
|
Predecessor
|
||||||||||||||||||
|
For the Three Months Ended March 31, 2017
|
||||||||||||||||||
|
Rocky Mountain
|
|
Northeast
|
|
Southern
|
|
Corp/Other
|
|
Total
|
||||||||||
Water Transfer Services
|
$
|
16,496
|
|
|
$
|
6,647
|
|
|
$
|
6,130
|
|
|
$
|
—
|
|
|
$
|
29,273
|
|
Disposal Services
|
2,594
|
|
|
321
|
|
|
543
|
|
|
—
|
|
|
3,458
|
|
|||||
Other Revenue
|
1,830
|
|
|
771
|
|
|
86
|
|
|
—
|
|
|
2,687
|
|
|||||
Total Service Revenue
|
20,920
|
|
|
7,739
|
|
|
6,759
|
|
|
—
|
|
|
35,418
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental Revenue
|
3,365
|
|
|
18
|
|
|
422
|
|
|
—
|
|
|
3,805
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Revenue
|
$
|
24,285
|
|
|
$
|
7,757
|
|
|
$
|
7,181
|
|
|
$
|
—
|
|
|
$
|
39,223
|
|
|
Successor
|
|
Predecessor
|
||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
||||
Net loss
|
$
|
(32,167
|
)
|
|
$
|
(35,962
|
)
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted average shares—basic
|
11,696
|
|
|
150,934
|
|
||
Common stock equivalents
|
—
|
|
|
—
|
|
||
Weighted average shares—diluted
|
11,696
|
|
|
150,934
|
|
||
|
|
|
|
||||
Net loss per common share:
|
|
|
|
||||
Net loss per basic common share
|
$
|
(2.75
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
||||
Net loss per diluted common share
|
$
|
(2.75
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
||||
Dilutive stock-based awards excluded:
|
|
|
|
||||
Stock options
|
—
|
|
|
—
|
|
||
Restricted stock awards and units
|
284
|
|
|
—
|
|
||
Warrants
|
—
|
|
|
24,277
|
|
||
Total
|
284
|
|
|
24,277
|
|
||
|
|
|
|
||||
Anti-dilutive stock-based awards excluded:
|
985
|
|
|
593
|
|
|
|
Successor
|
||||||||||||||||||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Remaining Useful Life (Years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Remaining Useful Life (Years)
|
||||||||||||
Disposal permits
|
594
|
|
|
(91
|
)
|
|
503
|
|
|
5.9
|
|
594
|
|
|
(47
|
)
|
|
547
|
|
|
6.2
|
||||||
|
$
|
594
|
|
|
$
|
(91
|
)
|
|
$
|
503
|
|
|
5.9
|
|
$
|
594
|
|
|
$
|
(47
|
)
|
|
$
|
547
|
|
|
6.2
|
•
|
Level 1 — Observable inputs such as quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;
|
•
|
Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
•
|
Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
|
Successor
|
||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Derivative warrant liability
|
$
|
669
|
|
|
$
|
477
|
|
Contingent consideration
|
500
|
|
|
500
|
|
|
Successor
|
||||||
|
Three Months Ended
|
|
Five Months Ended
|
||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Balance at beginning of period
|
$
|
477
|
|
|
$
|
—
|
|
Issuance of warrants
|
—
|
|
|
717
|
|
||
Adjustments to estimated fair value
|
192
|
|
|
(240
|
)
|
||
Balance at end of period
|
$
|
669
|
|
|
$
|
477
|
|
|
|
Successor
|
||||||
|
|
Three Months Ended
|
|
Five Months Ended
|
||||
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Balance at beginning of period
|
|
$
|
500
|
|
|
$
|
1,000
|
|
Cash payments
|
|
—
|
|
|
(500
|
)
|
||
Balance at end of period
|
|
500
|
|
|
500
|
|
||
Less: current portion
|
|
(500
|
)
|
|
(500
|
)
|
||
Long-term contingent consideration
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Successor
|
||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Accrued payroll and employee benefits
|
$
|
4,399
|
|
|
$
|
3,304
|
|
Accrued insurance
|
2,374
|
|
|
2,701
|
|
||
Accrued legal
|
1,058
|
|
|
1,749
|
|
||
Accrued taxes
|
1,462
|
|
|
2,362
|
|
||
Accrued interest
|
148
|
|
|
161
|
|
||
Accrued operating costs
|
5,303
|
|
|
2,663
|
|
||
Accrued other
|
714
|
|
|
999
|
|
||
Total accrued liabilities
|
$
|
15,458
|
|
|
$
|
13,939
|
|
|
|
|
|
|
Successor
|
||||||||||
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||
|
Interest Rate
|
|
Maturity Date
|
|
Fair Value of Debt (d)
|
|
Carrying Value of Debt
|
|
Carrying Value of Debt
|
||||||
Successor Revolving Facility (a)
|
6.92%
|
|
Aug. 2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Successor First Lien Term Loan (b)
|
8.92%
|
|
Aug. 2020
|
|
13,750
|
|
|
13,750
|
|
|
14,285
|
|
|||
Successor Second Lien Term Loan (b)
|
11.00%
|
|
Feb 2021
|
|
20,856
|
|
|
20,856
|
|
|
21,000
|
|
|||
Vehicle financings (c)
|
4.88%
|
|
Various
|
|
3,286
|
|
|
3,286
|
|
|
3,764
|
|
|||
Total debt
|
|
|
|
|
$
|
37,892
|
|
|
37,892
|
|
|
39,049
|
|
||
Less: current portion of long-term debt
|
|
|
(5,108
|
)
|
|
(5,525
|
)
|
||||||||
Long-term debt
|
|
|
|
|
|
|
$
|
32,784
|
|
|
$
|
33,524
|
|
(a)
|
The interest rate presented represents the interest rate on the
$30.0 million
Successor Revolving Facility as of
March 31, 2018
.
|
(b)
|
Interest on the Successor First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus
7.25%
. Interest on the Successor Second Lien Term Loan accrues at both an annual rate equal to
11.0%
, with
5.5%
payable in cash and
5.5%
payable in kind prior to February 7, 2018, and on or after February 7, 2018, at an annual rate equal to
11.0%
, payable in cash, in arrears, on the first day of each month.
|
(c)
|
Vehicle financings consist of capital lease arrangements related to fleet purchases with a weighted-average annual interest rate of approximately
4.88%
, which mature in varying installments between
2018
and
2020
.
|
(d)
|
Our Successor Revolving Facility, Successor First Lien Term Loan, Successor Second Lien Term Loan, and vehicle financings bear interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value.
|
|
|
Predecessor
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2017
|
|
Outstanding at the beginning of the period
|
|
25,283
|
|
Issued
|
|
—
|
|
Exercised
|
|
(2
|
)
|
Outstanding at the end of the period
|
|
25,281
|
|
|
|
Successor
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2018
|
|
Outstanding at the beginning of the period
|
|
118
|
|
Issued
|
|
—
|
|
Exercised
|
|
—
|
|
Outstanding at the end of the period
|
|
118
|
|
|
|
Successor
|
|
Predecessor
|
||||
|
|
Period Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Exercise price
|
|
$
|
39.82
|
|
|
$
|
0.01
|
|
Closing stock price
|
|
$
|
23.13
|
|
|
$
|
0.24
|
|
Risk free rate
|
|
2.62
|
%
|
|
2.40
|
%
|
||
Expected volatility
|
|
37.02
|
%
|
|
84.20
|
%
|
|
|
Successor
|
||
|
|
Three Months Ended
|
||
|
|
March 31, 2018
|
||
Severance and termination benefits
|
|
$
|
226
|
|
Contract termination costs and exit costs
|
|
373
|
|
|
Total restructuring and exit costs for Eagle Ford
|
|
$
|
599
|
|
|
Employee Termination Costs (a)
|
|
Lease Exit Costs (b)
|
|
Other Exit Costs (c)
|
|
Total
|
||||||||
Balance accrued at beginning of period - Successor
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restructuring and exit-related costs
|
226
|
|
|
37
|
|
|
336
|
|
|
599
|
|
||||
Cash payments
|
(14
|
)
|
|
—
|
|
|
(36
|
)
|
|
(50
|
)
|
||||
Balance accrued at end of period - Successor
|
$
|
212
|
|
|
$
|
37
|
|
|
$
|
300
|
|
|
$
|
549
|
|
|
|
Lease Exit Costs
|
||
Balance accrued at beginning of period - Successor
|
|
$
|
82
|
|
Cash payments
|
|
(13
|
)
|
|
Balance accrued at end of period - Successor
|
|
$
|
69
|
|
|
|
|
Successor
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2018
|
|
Stock option grants
|
|
—
|
|
Restricted stock grants
|
|
14
|
|
Restricted stock unit grants
|
|
1,311
|
|
Total grants in the Successor period
|
|
1,325
|
|
|
|
Successor
|
||
|
|
Three Months Ended
|
||
|
|
March 31, 2018
|
||
Stock options
|
|
$
|
(788
|
)
|
Restricted stock
|
|
—
|
|
|
Restricted stock units
|
|
11,766
|
|
|
Total expense
|
|
$
|
10,978
|
|
|
|
|
|
|
Predecessor
|
||
|
|
Three Months Ended
|
||
|
|
March 31, 2017
|
||
Stock options
|
|
$
|
65
|
|
Restricted stock
|
|
66
|
|
|
Restricted stock units
|
|
178
|
|
|
Total expense
|
|
$
|
309
|
|
|
Rocky Mountain
|
|
Northeast
|
|
Southern (b)
|
|
Corporate/ Other
|
|
Total
|
||||||||||
Three months ended March 31, 2018 - Successor
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
30,770
|
|
|
$
|
9,113
|
|
|
$
|
9,786
|
|
|
$
|
—
|
|
|
$
|
49,669
|
|
Direct operating expenses
|
26,346
|
|
|
7,814
|
|
|
7,467
|
|
|
—
|
|
|
41,627
|
|
|||||
General and administrative expenses
|
1,276
|
|
|
762
|
|
|
578
|
|
|
16,704
|
|
|
19,320
|
|
|||||
Depreciation and amortization
|
6,289
|
|
|
4,306
|
|
|
4,124
|
|
|
25
|
|
|
14,744
|
|
|||||
Operating loss
|
(3,141
|
)
|
|
(3,838
|
)
|
|
(7,044
|
)
|
|
(16,729
|
)
|
|
(30,752
|
)
|
|||||
Reorganization items, net
|
—
|
|
|
1
|
|
|
—
|
|
|
(93
|
)
|
|
(92
|
)
|
|||||
Loss before income taxes
|
(3,202
|
)
|
|
(3,899
|
)
|
|
(7,111
|
)
|
|
(17,955
|
)
|
|
(32,167
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
As of March 31, 2018 - Successor
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets (a)
|
131,530
|
|
|
49,396
|
|
|
100,583
|
|
|
10,914
|
|
|
292,423
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Three months ended March 31, 2017 - Predecessor
|
|
|
|
|
|
|
|
|
|||||||||||
Revenue
|
24,285
|
|
|
7,757
|
|
|
7,181
|
|
|
—
|
|
|
39,223
|
|
|||||
Direct operating expenses
|
21,232
|
|
|
7,957
|
|
|
5,100
|
|
|
—
|
|
|
34,289
|
|
|||||
General and administrative expenses
|
1,947
|
|
|
769
|
|
|
1,031
|
|
|
8,612
|
|
|
12,359
|
|
|||||
Depreciation and amortization
|
6,785
|
|
|
2,513
|
|
|
3,519
|
|
|
54
|
|
|
12,871
|
|
|||||
Operating loss
|
(5,679
|
)
|
|
(3,482
|
)
|
|
(2,469
|
)
|
|
(8,666
|
)
|
|
(20,296
|
)
|
|||||
Loss before income taxes
|
(5,701
|
)
|
|
(3,602
|
)
|
|
(2,527
|
)
|
|
(24,132
|
)
|
|
(35,962
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
As of December 31, 2017 - Successor
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets (a)
|
137,213
|
|
|
54,218
|
|
|
111,457
|
|
|
8,434
|
|
|
311,322
|
|
|
Predecessor
|
||||||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
39,223
|
|
|
$
|
—
|
|
|
$
|
39,223
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Direct operating expenses
|
—
|
|
|
34,289
|
|
|
—
|
|
|
34,289
|
|
||||
General and administrative expenses
|
8,612
|
|
|
3,747
|
|
|
—
|
|
|
12,359
|
|
||||
Depreciation and amortization
|
54
|
|
|
12,817
|
|
|
—
|
|
|
12,871
|
|
||||
Total costs and expenses
|
8,666
|
|
|
50,853
|
|
|
—
|
|
|
59,519
|
|
||||
Operating loss
|
(8,666
|
)
|
|
(11,630
|
)
|
|
—
|
|
|
(20,296
|
)
|
||||
Interest expense, net
|
(13,948
|
)
|
|
(260
|
)
|
|
—
|
|
|
(14,208
|
)
|
||||
Other (loss) income, net
|
(1,518
|
)
|
|
66
|
|
|
—
|
|
|
(1,452
|
)
|
||||
(Loss) income from equity investments
|
(11,830
|
)
|
|
(6
|
)
|
|
11,830
|
|
|
(6
|
)
|
||||
(Loss) income before income taxes
|
(35,962
|
)
|
|
(11,830
|
)
|
|
11,830
|
|
|
(35,962
|
)
|
||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income
|
$
|
(35,962
|
)
|
|
$
|
(11,830
|
)
|
|
$
|
11,830
|
|
|
$
|
(35,962
|
)
|
|
|
|
|
Predecessor
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Consolidated
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(9,717
|
)
|
|
$
|
2,431
|
|
|
$
|
(7,286
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from the sale of property and equipment
|
—
|
|
|
371
|
|
|
371
|
|
|||
Purchase of property, plant and equipment
|
—
|
|
|
(1,029
|
)
|
|
(1,029
|
)
|
|||
Net cash used in investing activities
|
—
|
|
|
(658
|
)
|
|
(658
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from Predecessor revolving credit facility
|
48,536
|
|
|
—
|
|
|
48,536
|
|
|||
Payments on Predecessor revolving credit facility
|
(40,006
|
)
|
|
—
|
|
|
(40,006
|
)
|
|||
Payments on vehicle financing and other financing activities
|
(7
|
)
|
|
(1,461
|
)
|
|
(1,468
|
)
|
|||
Net cash provided by (used in) financing activities
|
8,523
|
|
|
(1,461
|
)
|
|
7,062
|
|
|||
Net (decrease) increase in cash
|
(1,194
|
)
|
|
312
|
|
|
(882
|
)
|
|||
Cash, cash equivalents and restricted cash - beginning of period
|
2,217
|
|
|
197
|
|
|
2,414
|
|
|||
Cash, cash equivalents and restricted cash - end of period
|
$
|
1,023
|
|
|
$
|
509
|
|
|
$
|
1,532
|
|
|
•
|
Oil shale area
:
includes our operations in the Bakken Shale area.
|
•
|
Natural gas shale areas
:
includes our operations in the Marcellus, Utica, and Haynesville Shale areas.
|
•
|
Logistics and Wellsite Services:
Delivery of freshwater to wellsites, freshwater procurement and transfer services, staging and storage of equipment and materials and rental of wellsite equipment.
|
•
|
Water Midstream:
Collection and transportation of produced and flowback water from wellsites to disposal network via truck or fixed pipeline system; supply of freshwater for drilling and completion via pipeline system; provision and operation of gathering systems for collection and transportation of produced and flowback water to disposal wells.
|
•
|
Disposal Wells and Landfill:
Disposal of liquid waste water from well completion operations and well production; disposal of solid drilling waste.
|
|
Successor
|
|
Predecessor
|
||||
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenue - from predominantly oil shale areas (a)
|
$
|
32,902
|
|
|
$
|
26,392
|
|
Revenue - from predominantly gas shale areas (b)
|
16,767
|
|
|
12,831
|
|
||
Total revenue
|
$
|
49,669
|
|
|
$
|
39,223
|
|
|
|
|
|
||||
Loss before income taxes
|
$
|
(32,167
|
)
|
|
$
|
(35,962
|
)
|
Net loss
|
(32,167
|
)
|
|
(35,962
|
)
|
(a)
|
Represents revenues that are derived from predominantly oil-rich areas consisting of the Bakken and Eagle Ford Shale areas.
|
(b)
|
Represents revenues that are derived from predominantly gas-rich areas consisting of the Marcellus, Utica and Haynesville Shale areas.
|
|
Successor
|
|
Predecessor
|
|
|
|
|
|||||||
|
Three Months Ended
|
|
|
|||||||||||
|
March 31,
|
|
Increase (Decrease)
|
|||||||||||
|
2018
|
|
2017
|
|
2018 vs 2017
|
|||||||||
Service revenue
|
$
|
45,527
|
|
|
$
|
35,418
|
|
|
$
|
10,109
|
|
|
28.5
|
%
|
Rental revenue
|
4,142
|
|
|
3,805
|
|
|
337
|
|
|
8.9
|
%
|
|||
Total revenue
|
49,669
|
|
|
39,223
|
|
|
10,446
|
|
|
26.6
|
%
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|||||||
Direct operating expenses
|
41,627
|
|
|
34,289
|
|
|
7,338
|
|
|
21.4
|
%
|
|||
General and administrative expenses
|
19,320
|
|
|
12,359
|
|
|
6,961
|
|
|
56.3
|
%
|
|||
Depreciation and amortization
|
14,744
|
|
|
12,871
|
|
|
1,873
|
|
|
14.6
|
%
|
|||
Impairment of long-lived assets
|
4,131
|
|
|
—
|
|
|
4,131
|
|
|
100.0
|
%
|
|||
Other, net
|
599
|
|
|
—
|
|
|
599
|
|
|
100.0
|
%
|
|||
Total costs and expenses
|
80,421
|
|
|
59,519
|
|
|
20,902
|
|
|
35.1
|
%
|
|||
Operating loss
|
(30,752
|
)
|
|
(20,296
|
)
|
|
10,456
|
|
|
51.5
|
%
|
|||
Interest expense, net
|
(1,250
|
)
|
|
(14,208
|
)
|
|
(12,958
|
)
|
|
(91.2
|
)%
|
|||
Other expense, net
|
(73
|
)
|
|
(1,458
|
)
|
|
(1,385
|
)
|
|
(95.0
|
)%
|
|||
Reorganization items, net
|
(92
|
)
|
|
—
|
|
|
92
|
|
|
100.0
|
%
|
|||
Loss before income taxes
|
(32,167
|
)
|
|
(35,962
|
)
|
|
(3,795
|
)
|
|
(10.6
|
)%
|
|||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||
Net loss
|
$
|
(32,167
|
)
|
|
$
|
(35,962
|
)
|
|
$
|
(3,795
|
)
|
|
(10.6
|
)%
|
|
|
Successor
|
|
Predecessor
|
||||
|
|
Three months ended March 31,
|
||||||
Net cash (used in) provided by:
|
|
2018
|
|
2017
|
||||
Operating activities
|
|
$
|
(7,253
|
)
|
|
(7,286
|
)
|
|
Investing activities
|
|
8,576
|
|
|
(658
|
)
|
||
Financing activities
|
|
(1,935
|
)
|
|
7,062
|
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(612
|
)
|
|
$
|
(882
|
)
|
Exhibit
Number
|
Description
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
10.6
|
|
|
|
10.7
|
|
|
|
10.8
|
|
|
|
10.9*
|
|
|
|
31.1*
|
|
|
|
31.2*
|
|
|
|
32.1*
|
|
|
|
99.1
|
|
|
|
101.INS*
|
XBRL Instance Document.
|
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document.
|
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
Filed herewith.
|
Date:
|
May 9, 2018
|
|
|
/s/ Charles K. Thompson
|
|
Name:
|
Charles K. Thompson
|
Title:
|
Interim Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
|
|
/s/ Edward A. Lang
|
|
Name:
|
Edward A. Lang
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
|
|
|
Interim CEO:
|
|
|
The Company:
|
|
|
|
|
|
|
|
Nuverra Environmental Solutions, Inc.
|
|
|
|
|
|
|
|
|
/s/ Charles K. Thompson
|
|
By:
|
/s/ Joseph M. Crabb
|
Charles K. Thompson
|
|
Name: Joseph M. Crabb
|
|
|
|
Title: Executive Vice President
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the period ended
March 31, 2018
of Nuverra Environmental Solutions, Inc.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
|
4.
|
As the registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
As the registrant's certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Charles K. Thompson
|
Name:
|
Charles K. Thompson
|
Title:
|
Interim Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the period ended
March 31, 2018
of Nuverra Environmental Solutions, Inc.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
|
4.
|
As the registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
As the registrant's certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Edward A. Lang
|
Name:
|
Edward A. Lang
|
Title:
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Charles K. Thompson
|
|
By:
|
/s/ Edward A. Lang
|
Name:
|
Charles K. Thompson
|
|
Name:
|
Edward A. Lang
|
Title:
|
Interim Chief Executive Officer
(Principal Executive Officer)
|
|
Title:
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|